How to Use Data to Improve Prospect Identification
I have always found one of the most exciting things about the nonprofit sector to be its diversity. Nonprofits encompass organizations of all sizes, varied organizational structures, unique missions, and a limitless range of fundraising priorities. Yet for all that may be different between organizations, shared fundraising challenges seem to endure, especially when it comes to identifying more opportunities for major gifts. No matter if your organization is large or small, learning to use data effectively is your most powerful method to improve prospect identification for major giving.
Understanding Benchmark Data
The broadest industry benchmarking data is a good place to start. It provides an overarching view of the state of fundraising in recent years.
- The good news: Total dollars raised and the average gift amount have increased steadily, and donors consistently respond with a large influx of support in the face of crisis (look no further than the record-setting increase in giving to food banks during the COVID-19 pandemic).
- The bad news: Overall donor counts are shrinking as the number of nonprofits continues to grow. More organizations are competing for a smaller pool of prospects who likely receive more solicitations than ever before.
The Pareto principle tells us that just 20% of inputs account for 80% of output, and we see this in full effect when it comes to fundraising:
- The top 20% of donor households accounted for about 80% of all fundraising revenue in 2019
- The top 1% of donor households’ share of overall revenue has grown from 37% to 45% since 2011
These top donors are giving more, but their support does not come easy. They require high-touch, personalized cultivation over an extended time horizon; on average, it takes two to three years from the first touchpoint to secure a new major gift, with first major gifts requiring more than 5 years.
This is where more focused data comes into play. Although fundraising is undoubtedly an art form in part—there’s a critical human element to building the requisite long-term relationship central to major giving—it is also a science. The science of fundraising is built on valuable constituent data that can help your organization steer resources toward high-potential opportunities and cultivation efforts. Below I’ll touch on some of the most common practices I have observed among successful, data-driven nonprofits.
Making Identification Proactive, Not Reactive
Ask a fundraiser what triggers their nonprofit to elevate a constituent to a higher level of solicitation (i.e., to midlevel or major giving), and too often the answer will be something along the lines of “when they give a gift of $1,000 or more” or “when they attend three or more events in a given quarter.”
This is reactive prospect identification.
By waiting for the prospect to take the initiative and essentially “raise their hand,” you further delay the start of a high-touch cultivation process that—as mentioned earlier—is already going to take a long time.
The characteristics of a strong major gift prospect do not materialize out of thin air just because they make their first $1,000 gift. Major gift potential is an observable quality from the moment a donor’s name pops up in your database, even if the event that landed them there seems small or immaterial, such as signing an online petition or playing in a charity golf tournament.
How do top fundraisers identify major prospects early on? They rely on regular wealth screening and predictive modeling. These proactive methods allow you to flag constituents with the financial capacity and behavioral likelihood to make large gifts as early as the first time they engage with you.
Fundraisers for the Los Angeles Regional Food Bank used insights from wealth and predictive modeling to identify 3,000 of their best major gift prospects for their mission of helping 800,000 residents battling food insecurity. The results:
- 15 times more new donors
- 450% increase in major gift dollars
- 11 gifts above $1 million
“The influx of money has changed the Los Angeles Regional Food Bank not just for the moment, but for the future,” said Roger Castle, chief development officer.
By making your prospect identification proactive rather than reactive you can cut down on the time to secure a major gift, avoid missed opportunities from prospects who will never self-identify, and ensure that high-value prospects receive purposeful cultivation commensurate with their value from day one.
Upgrade Your Asks Strategically
One of the things that has most surprised me is how often there is significant untapped revenue potential among constituents who are already giving at a high level. Here’s a fundraiser’s thought process: If a prospect has already given or demonstrated willingness to give at the $20,000 level, then surely this must be near their capacity, and asking for $40,000 would be a bridge too far, right?
This is often not the case, so fundraisers risk leaving money on the table if they don’t optimize their ask.
Consider the results of frontline fundraisers at Notre Dame de Namur University. They leveraged the donor data at their fingertips to ask for higher gift amounts and donors responded with enthusiasm:
- Average gift size increased by 881%
- One donor increased their $5,000 donation tenfold, to $50,000
Depending solely on screening for wealth can be a peril, prompting you to settle for a too-low ask. Wealth screening is a valuable tool, but because it does not account for liabilities it will always be an imperfect measure of giving capacity. Capacity-based predictive modeling that considers spending behavior rather than just publicly identifiable wealth is essential to refining your gift targets.
The data is there to guide you, so set your target asks confidently. Don’t be afraid to stretch by upgrading donors who are already giving at a high level. You only have so many of these relationships; maximize the value of each one.
Going Beyond Wealth Screening
Simply being wealthy doesn’t automatically make somebody philanthropic, much less a strong prospect for your particular organization. Successful nonprofits utilize a number of variables to gauge a prospect’s value.
Social or country clubs, alumni associations, and other groups can serve as common threads that connect potential donors to your existing supporters: current donors, staff, and so on. Lately, I have seen nonprofits achieve fundraising success with campaigns that target the personal and professional connections of board members.
One of the simplest indicators of likelihood to give to your cause is a history of giving to other organizations with a similar mission. Resources such as Blackbaud Giving Search can help you identify donors and gifts by donation type, amount, and recipient mission, giving you visibility into your prospects’ philanthropic interests.
Developed from multidimensional data (behavioral, demographic, socioeconomic, etc.), persona models classify constituents into groups that share similar traits. Based on these traits, you can make inferences as to what causes each group tends to support and which type of messaging is likely to resonate with them. Personas can be especially helpful when identifying prospects for specific campaigns or initiatives.
Identify Candidates for Planned and Asset-Based Giving
One way to maximize the revenue potential of major donors is to steer them toward planned or asset-based giving. This type of giving offers various tax and liquidity-related benefits to the donor as compared to cash giving. Many donors who are excellent candidates have simply never thought about giving in this way before, so once again it is critical to be proactive rather than expecting the prospect to initiate the discussion.
Planned giving is a high priority for Broadway Cares/Equity Fights AIDS, a social services nonprofit providing access to medication, counseling, meals, and financial assistance. Data is helping the organization expand its outreach.
“We’re identifying who in our database is a long-time supporter and at an age where they’re looking at estate planning,” said Sarah Cardillo, senior development officer. “What we are able to understand about people, in terms of their interests and capacity to give, is transformative. It helps us focus our energy, so we are that much more effective in fundraising and, ultimately, in making a difference for those who are simply looking for a helping hand in times of need or crisis.”
A combination of wealth screening services and specialized predictive models can help you proactively identify constituents with favorable characteristics for this type of giving. Structuring these gifts can get complicated, so it can be worthwhile to enlist the services of firms that specialize in helping nonprofits and donors coordinate this type of giving, such as The Giving Crowd.
A More Complete Picture of Your Prospects
As you develop your plan to use data to improve prospect identification, remember that neither wealth screening nor predictive analytics will ever be perfect. But don’t let perfect get in the way of good. At a time when more nonprofits compete for fewer donors with limited resources, data should drive your prospect identification, cultivation, and engagement and ultimately drive the success of your fundraising program.
If your nonprofit is ready to advance its mission with data and analytics, Blackbaud offers solutions specifically focused on your type of organization. Learn more.